Bond deals save City of Houston water system over $200 million

Submitted

Published 6:32 pm, Sunday, March 16, 2014

Houston City Controller Ronald Green announced that a bond sale of $1.3 billion by the City’s Combined Utility System to re-finance previously issued bonds will generate approximately $207.5 million of savings.

Rated AA by S&P and Aa2 by Moody’s, the bonds attracted significant demand, even in tougher parts of the curve, and allowed the City to achieve an extremely low interest rate of 3.15 percent on the tax-exempt sale and 3.59 percent on the taxable deal.

“Our expanded investor outreach and continued transparency, including a recently unveiled investor relations page and an annual investor conference, appear to have paid off handsomely. We were able to leverage this strong demand and press for lower interest rates to increase the savings on both transactions. The substantial savings generated from this refunding bolsters the System’s ability to carry out its mission to provide clean and safe water to our citizens,” noted Controller Ronald Green. In addition to demand from previous purchasers, the System attracted several new investors.

Council Member Jerry Davis, vice chair of the Budget and Fiscal Affairs committee, was also in attendance along with other City staff and noted that “it is imperative as Council Members, we perform our own due diligence regarding matters on which we vote. Accordingly, I felt it was critical for me to actively engage in a deal of this magnitude and complexity. I was extremely pleased with the performance and the significant savings on both transactions, which were led by Siebert Brandford Shank and JP Morgan.”